According to insiders, the new Bayer boss Bill Anderson wants to get the pharmaceutical and agricultural group fit with an efficiency program before it is reorganized. Before Bayer gets a new structure, Anderson will first launch a program to reduce bureaucracy and increase efficiency, the Reuters news agency learned from several people familiar with the matter. This is likely to particularly affect upper and middle management levels in order to achieve flatter hierarchies.
Anderson plans to provide more details at the next internal strategy meeting, one of the insiders said. Bayer did not want to comment. The moves will allow Anderson to show investors early improvements at the company, which is under pressure from activist investors, and buy time to develop more comprehensive restructuring plans in the next few months, people familiar with the matter said.
“There is a lot to clean up at Bayer,” said another insider. The changes are overdue. Previous cost-cutting measures would not have had the desired effect. Anderson is being advised by management consultancy McKinsey, as several insiders said. A lot will happen at Bayer in the next 90 days, one of them explained.
Streamlining the planning and decision-making processes will make many positions superfluous. Many were looking for new positions. Strategy chief Oliver Kohlhaas has already resigned and his position will not be filled. The reduction in management positions is likely to result in high severance payments. The costs for this have not yet been determined, nor has the scope and exact timing. Kohlhaas and McKinsey declined to comment.
Above all, investors expect Anderson to regain investor trust
The former Roche pharmaceutical boss Anderson took over the helm at Bayer in June from his predecessor Werner Baumann, who had lost a lot of trust with the billion-dollar takeover of the glyphosate developer Monsanto. Above all, investors expect Anderson to regain the trust of investors and to review the group structure with currently three areas – agricultural business, pharmaceuticals and over-the-counter health products.
Speculation about a split of Bayer has been circulating for years, most recently fueled by the entry of activist investors. Anderson said in August in reporting its first quarterly results that too much bureaucracy, along with debt and litigation related to the weedkiller Roundup and the chemical PCB, was causing the company to miss opportunities.
“The burden of legal disputes, corporate bureaucracy and debt – all of this affects our ability to concentrate on the mission,” said the 57-year-old American, criticizing his predecessor’s legacy. He added at the time that he wanted to move from annual to 90-day budgeting cycles and give teams more freedom to make decisions. “I am convinced that we can achieve significantly better results if we change the way we work,” he emphasized.
Anderson received advance praise from investors even before he took office; investors and analysts praised his choice and believed he could change course. In August, Anderson said he was keeping all doors open in the group’s ongoing strategic review and that nothing was off the table. He wants to keep investors informed about his considerations in the coming months.
The pressure is high: investors expect more clarity this year and don’t want to wait until 2024. However, there is no consensus among them as to what would be the best corporate structure for Bayer in the future. While the fund company Union Investment sees a spin-off of the business with over-the-counter health products as an option to change the mood among the owners, others are bringing up a partial listing of the agricultural division on the US stock exchange as a possible major catalyst. Investors would also welcome it if Bayer could finally draw a line under the expensive legal disputes in the USA over glyphosate and PCBs. Most recently, the hedge fund Artisan Partners, which has a stake in Bayer, called for the Leverkusen-based group to be split up.